The WTO and Biofuels: The Possibility of Unilateral Sustainability Requirements

Article excerpt

I. INTRODUCTION

"What I discovered was that ethanol might completely replace petroleum in [the United States]. And a lot of countries."1

Vinod Khosla, venture capitalist

Over the last decade, the global scientific community has largely accepted the existence of global wanning. According to the Intergovernmental Panel on Climate Change ("IPCC") of the United Nations, "major advances in climate modeling and the collection and analysis of data now give scientists Very high confidence' (at least a 9 out of 10 chance) of being correct in their understanding of how human activities are causing the world to warm."2 In turn, governments around the world have begun implementing regulations designed to stem the rise in global temperatures. In particular, such regulations have been aimed at minimizing emissions of greenhouse gases. In the eyes of many countries, one of the most promising solutions to the problem of global warming and greenhouse gases is to substitute biofuels for fossil fuels. As the price of fossils fuels has risen over the last decade and has shown few signs of retreating, biofuels have at last become an economically viable and potentially environmentally friendly alternative to fossil fuels. While biofuel production and trade today remain miniscule compared to that of fossil fuels, the future of biofuels looks promising given the ready availability of production inputs, the advanced state of much biofuel technology, and the sustained high prices of fossil fuels.

Trade in biofuels raises important questions concerning international trade law, particularly with regard to the interactions between World Trade Organization ("WTO") rules and environmental protection efforts that operate outside of the WTO framework. Specifically, many environmental activists have sounded alarm bells over concerns that several WTO Panel and Appellate Body rulings imply that free trade trumps environmental protection. The potential for environmental degradation caused by biofuel production has led environmental advocates to argue that in some cases the use of biofuels may be counterproductive because the manner in which the inputs are grown, harvested, and processed may do more to harm the environment than to protect it.3 Under such conditions, some researchers contend, trade in biofuels should be curbed.4 If one of the central rationales for switching to fossil fuel alternatives stems from a desire to protect the global environment, then environmentally unfriendly biofuels must be avoided completely.

Under current WTO rules and jurisprudence, however, the ability of countries to heed the call of such advocates appears limited. Simply put, potentially environmentally friendly provisions of the General Agreement on Tariffs and Trade ("GATT")5 have been construed narrowly and thus provide little room for sustainable development principles to play meaningful roles in trade disputes.6 Accordingly, advocates of sustainability have interpreted the WTO's decisions as placing free trade ahead of environmental and human health considerations.7

While the concern of WTO skeptics is justified, declaring complete and total victory for free trade-at the expense of environmental protection-would be conceding too much. When WTO rules were initially adopted, the biofuel industry was practically nonexistent. Thus, treatment of biofuels under WTO rules remains unclear. The language of WTO jurisprudence may very well accommodate unilateral efforts to address genuine fears of environmental degradation. More specifically, the existing Generalized System of Preferences ("GSP") provides a framework that may allow for legal discrimination against biofuels produced using unsustainable methods.

This Development introduces the international legal issues raised by increasing trade in biofuels. section II of the Development surveys the current biofuel landscape, providing statistics on the use and trade of biofuels, and discusses the prospect for increased production and trade in biofuels. …